Following a presentation I made at a Seminar Group conference in Oregon on crane easements, one of my colleagues brought to my attention the recent NY case of Lend Lease (US) Construction LMB Inc. v. Zurich American Insurance Co. The NY Court of Appeals found that damage caused to a tower crane when Superstorm Sandy hit land was not covered under Zurich’s builders’ risk policy. While the policy contained a grant of coverage for “temporary works” (such as scaffolding, shoring, formwork and fences), the policy contained a “contractor’s tool exclusion,” which the Court found excluded coverage for the tower crane. The opinion addressed only the damage to the crane as opposed to damage caused by the crane, the latter being likely covered under other provisions of the policy. While not alone dispositive, the Court noted that the plaintiff contractor was unable to show that the value of the crane itself was disclosed as part of the “total project value” being insured under the policy. Given the costs and risks associated with heavy equipment, a good insurance evaluation at project inception should always consider coverage for large tools, equipment and machinery.
